Investment classes let students use real money

Both the UNF and JU groups have made profits for their schools.

Many finance students learn about investing by picking stocks and following them in a class.

But when it's real money, things can get stressful.

Especially if it's about $800,000 of the university endowment and if a stock is plummeting.

"There are a lot of Pepto-Bismol moments," said Reinhold Lamb, professor at the University of North Florida.

Every year, students in UNF's Osprey Financial Group class manage 1 percent of the school's endowment fund and invest it "the same as the pros do," Lamb said.

Jacksonville University students also manage a portfolio for an endowment of at least $400,000 set up for the class.

At both schools, the students have made money. UNF's students have beaten industry benchmarks four of the six years of existence. JU's student fund outperformed the market from 2002 to 2007, but 2008 figures were unavailable.

With this year's economic downturn - mainly propelled by the housing market problems - nearly all financial portfolios have lost money. UNF's endowment lost money as well, but by investing in conservative funds the Osprey Financial Group was able to not lose as much as the industry benchmark.

About 12 graduate and undergraduate students are in the UNF class, which is "almost like a fraternity," Lamb said. During the summer and first few weeks of the course, students are trained in managing a portfolio. They partner up and research their own financial sectors and present proposals to the class. Everyone votes on decisions except Lamb. He never gives his opinion.

"Occasionally, I think, 'Well, this would be a bonehead move,' " he said. "Sometimes I was correct and sometimes they were correct, but it's not my fund to manage."

Lamb only vetoes a proposal if he thinks they haven't researched it thoroughly or if it violates the investment rules of the client, UNF. He said he's only done that twice in six years.

Lamb said students learn about how to work with others and assess their own tolerance to risk.

An example of how students also learned how to work for a client came this year when they voted to not invest in Altria Group, formerly known as tobacco giant Phillip Morris, because of moral opposition. Lamb advised his students that UNF never specified any moral guidelines, but they stuck to their guns.

The biggest lesson though is how to react when you lose money, something they wouldn't learn with fake funds because, "it would just be a game to them," Lamb said.

Senior Jayme Woods compared the difference to trying to learn Spanish in a textbook and trying to learn Spanish by traveling to Spain.

"If fake money had been used, market movements would have been much less gut-wrenching because we would have been watching the market roller coaster rather than actually riding it," Woods said.

In the past six years, UNF's class has made more than $165,000 in earnings for the endowment. JU's class boasts more than $200,000 in additional value between 2003 and 2007. But Lamb said the real indicator of success is how many students are now working at top investment firms in New York and Chicago.

Jim Andrews, a 2006 graduate, said his experience helped him find a job as a quantitative analyst at MarketGrader.com.

"I use skills learned in that class almost every day in my current position," he said.